1.The board members of Felicia & Fred are strategically evaluating the prospects of fulfilling increasing demand for its products and reaching new consumers. You have recently evaluated the expansion of manufacturing facilities for Felicia & Fred, entailing two alternative projects: customizing and refurbishing a large former mill building; versus building a new facility after razing the old structure, which currently exists on the proposed site.
|
Project Strategy
|
NPV
|
IRR
|
|
Refurbish
|
$450,000
|
14%
|
|
Build New
|
$350,000
|
16%
|
The company's WACC is currently 10%.
Which of the project alternatives should be chosen by the company? Which decision rule should be the basis of decision making when the outcomes conflict?
2. Here is a link (https://personal.vanguard.com/us/funds/snapshot?FundId=0040&FundIntExt=INT) to information about Vanguard 500 Index, a mutual fund.
What do you think about Vanguard's diversity? Is it diversified?
What are some risks that someone may face if he or she invested in the Vanguard 500 Index?
What are other considerations that an investor may have when deciding whether or not to invest in the Vanguard 500 Index?